Factor Intensity, product switching, and productivity: Evidence from Chinese exporters

Yue Ma, Heiwai Tang and Yifan Zhang

Journal of International Economics, 2014, vol. 92, issue 2, 349-362

Abstract: This paper analyzes how a firm's specialization in its core products after exporting affects its factor intensity and productivity. Using Chinese manufacturing firm data for the 1998–2007 period, we find that firms become less capital-intensive but more productive after exporting, compared to non-exporters that share similar ex ante characteristics. To rationalize these findings that contrast with existing studies, we develop a variant of the model by Bernard, Redding, and Schott (2010, 2011) to consider firms producing multiple products with varying capital intensity. The model predicts that when a firm in a labor-abundant country starts exporting, it specializes in its core competencies by allocating more resources to produce more labor-intensive products. Firm ex ante productivity is associated with a smaller decline in capital intensity after exporting. A sharper post-export decline in capital intensity is associated with a larger increase in measured total factor productivity. We find firm-level evidence supporting these predictions. Using transaction-level data for the 2000–2006 period, we show that Chinese new exporters add products that are less capital-intensive than their existing products and drop those that are more capital-intensive in subsequent years.

Keywords: Exporters; Productivity; Factor intensity; Multi-product firms (search for similar items in EconPapers)
JEL-codes: F11 L16 O53 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (92)

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Related works:
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2013)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2012)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:92:y:2014:i:2:p:349-362

DOI: 10.1016/j.jinteco.2013.11.003

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